What Severance Pay Rules Must Employers Follow in Namibia?

Which Employees Qualify for Severance Pay?

• Employees with at least 12 months of continuous service whose employment ends due to redundancy, death, or certain incapacity reasons.
• Employees dismissed for operational requirements where the role is abolished or significantly reduced and no suitable alternative is offered.
• Employees whose contracts are terminated because they are medically unfit or injured and can no longer perform their work, where the law treats this as a severance-triggering event.
• Employees on fixed-term contracts that end early for operational reasons, if the termination meets statutory severance conditions.
• Employees who are not dismissed for misconduct or poor performance, since these grounds generally do not attract statutory severance.
• Employees who are not genuine independent contractors, as only workers classified as employees under the Labour Act qualify.

What Are the Legal Timelines for Paying Severance?

In Namibia, the Labour Act requires you to pay all amounts due to an employee, including any severance pay, as soon as practicable after termination and no later than the final settlement date agreed or reasonably expected. In practice, most employers pay severance together with the last salary, within a few days of the termination date or by the next regular payroll run. You should document the payment date in the termination letter and provide a written breakdown of how severance was calculated. Where a dispute is pending, you should still pay the undisputed portion on time and clearly record any amounts held back. Paying promptly reduces the risk of complaints to the Labour Commissioner and potential interest or additional awards.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Namibia, you risk statutory claims, orders from the Labour Commissioner, and reputational damage. Non-compliance can lead to back-pay awards, interest, and additional compensation where the termination itself is found to be unfair.

• Employees can lodge disputes with the Labour Commissioner for unpaid or underpaid severance.
• You may be ordered to pay outstanding severance plus interest from the date it fell due.
• If the dismissal is ruled unfair, you could face additional compensation or reinstatement orders.
• Persistent or serious breaches can trigger inspections and closer regulatory scrutiny of your company.
• Legal and advisory costs can increase significantly if matters escalate to arbitration or court.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to comply with Namibia’s severance rules, but it can shift day-to-day compliance tasks. In most EOR models, the EOR is the legal employer on paper and is responsible for calculating and paying severance in line with the Labour Act. However, your company usually remains the de facto decision-maker on terminations and can be drawn into disputes if the reason for dismissal is challenged. You should ensure your EOR contract clearly allocates responsibility for severance calculations, funding, documentation, and dispute handling. Aligning internal approvals with the EOR’s processes helps avoid gaps that could expose you to joint or reputational liability.

Be 100 Percent Compliant in Offering Severance with Playroll

Working with Playroll helps your company turn Namibia’s severance rules into a clear, repeatable process instead of a last-minute scramble. Our team tracks statutory triggers, minimum service thresholds, and calculation rules so you know exactly when severance is due and how much to budget. We also help you align notice periods, termination letters, and payroll cut-off dates so that severance is paid on time and fully documented.

When you use Playroll as your global employment partner or via our Employer of Record solution, we embed Namibian labour-law requirements directly into your hiring and offboarding workflows. Your managers stay focused on business decisions, while we handle the compliance details, from contract wording to final payslips. That combination of local expertise and structured processes helps your team avoid disputes, protect your brand, and stay confidently compliant in Namibia.